5 Risks/Rewards of Today’s Investment Options

Each of us has a variety of investment options and/or options to choose from when deciding how best to invest our funds! Each of these has risks and rewards, and based on a combination of personal comfort zone, needs, goals, priorities, plans (short and long term), and personal financial situation, a decision should be made. decision. , on a personal level, because, that is, anything but a unique situation. One must learn, as much as possible, and proceed, with a clear mind, focus and create your personal strategy. With that in mind, this article will briefly attempt to consider, examine, review, and discuss the risks. / rewards, equilibrium, of 5 examples.

1. Inventory: Should you invest in the stock market, and if so, how should you make the decision, as to your approach? How much risk are you willing to take and can you afford? If you take a risky approach, while the potential may be higher, the potential to lose is also higher! If you buy blue-chips, small cap, broad – course, dividends – focused, individual, stocks and/or mutual funds? What are you looking for, to achieve, and what is your willingness, to accept risk? Never invest until you know your personal goals!

2. Bonds – government vs. corporate: While a stock represents partial ownership in a corporation, a bond is a debt obligation! While bonds may have lower risks, in many cases, that does not mean they are risk free. Between the time you buy a bond and its maturity, the price can and often does fluctuate, and so if you need liquidity, that can be a factor! Also, it’s important to realize that interest rates on bonds depend on many factors, and typically that rate depends on other rates. Because government bonds are considered lower risk and tax-free (in whole or in part), they generally pay a lower rate than corporate bonds.

3. real estate: For most, the value of our home is our main financial asset. In the longer term, real estate has performed as well or better than most other vehicles, but it should never be considered a short-term solution!

4. Bank/Insurance: Parking one’s funds, either at the bank or purchasing insurance, are considered safe and secure vehicles. However, the rate of return is often lower, and some banking and insurance vehicles are much less liquid than others.

5. Options (buy, sell, covered, bare): One stock strategy is to use options, like investments. These come in a variety of forms and various risks. One can either buy or sell an option and generally selling has lower risks while buying has risks/exposure of short-term fluctuations in the stock market. The difference between a covered and a naked option is that the former means that you own the underlying stock, you are selling the option and therefore reducing your potential exposure/risk.

A wise strategy would be, in order to learn more about each of these possibilities, to give yourself a checkup, from the neck up, and decide which one might be best for you. The wiser and more educated the consumer is, the better they can make an informed decision!